Crowdsourcing and crowdfunding areimportant concepts when it comes to new product development.
Crowdsourcing isconcerned with the acquisition of information, opinions or work from a largegroup of internet users who submit their data in various internet platformsincluding social media and mobile apps. Crowdsourcing is mostly done by paidfreelancers though in some instances people voluntarily undertake some smalltasks. Crowdsourcing existed prior to the digital age, and it has beenextremely advantageous in terms of improvements in costs, quality, speed,diversity, scalability, and flexibility (Smith, 2012). There are various formsof crowdsourcing such as innovation contests and idea competitions which giveorganizations the relevant ideas that are beyond those provided by theemployees.
Crowdsourcing allows business organizations to tap into a wide arrayof skills and expertise from anywhere around the country or the globe withoutincurring higher overhead costs brought about by in-house employees. It usuallyencompasses taking a large job requiring many individual tasks and breaking itdown into smaller segments that can be worked on separately by a crowd ofpeople. Most companies requiring the design of new products usually turn to thecrowd for various opinions and ideas (Gatautis & Vitkauskaite, 2014).
Instead of relying on small focus groups, businesses are able to reach millionsof consumers online, thereby obtaining opinions from diverse cultural andsocioeconomic backgrounds. Sometimes businesses use crowdsourcing to assess themanner in which the same job is undertaken by multiple people, therefore makingit easier to pick the best. Crowdsourcing shouldbe differentiated from crowdfunding which is focussed on seeking money forsupporting individuals, start-ups and charities. Crowdfunding can therefore, bedefined as the pulling together of small amounts of capital from variousindividuals in order to finance a business venture (Mollick, 2014). It relieson the